ISRAEL Law and Practice Contributed by: Charles Gottlieb and Osnat Issan, Gottlieb Gera & Co Advocates
2.10.2 Declarations Made Concerning Conventions There is no applicable information in this jurisdiction. 2.10.3 Application of Article XIII of the Protocol on Matters Specific to Aircraft Equipment There is no applicable information in this jurisdiction. 2.10.4 Enforcement of Conventions There is no applicable information in this jurisdiction. 2.10.5 Other Conventions Israel is not a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft, nor is it a party to the 1933 Rome Convention on the Unification of Certain Rules relating to the Precaution - ary Arrest of Aircraft. 3. Aircraft Debt Finance 3.1 Structuring 3.1.1 Restrictions on Lending and Borrowing Foreign lenders locally financing an aircraft may be subject to the Supervision of Financial Services (Reg - ulated Financial Services) Law 2016, which in certain cases would require lenders to apply for a “financial services” licence in Israel, unless such lenders meet one of the exemptions provided under the law. Regulations promulgated under the law exempted certain types of transactions and entities from the licensing requirement, including banks and insurers licensed in OECD member countries. 3.1.2 Effect of Exchange Controls or Government Consents See 2.1.4 Exchange Controls . 3.1.3 Granting of Security to Foreign Lenders Israeli law does not limit domestic borrowers from granting security to foreign lenders. 3.1.4 Downstream, Upstream and Cross-Stream Guarantees Downstream, upstream and cross-stream guarantees in favour of lenders are permitted in Israel.
3.1.5 Lenders’ Share in Security Over Domestic SPVs It is advisable for lenders to take share security over a domestic special purpose vehicle that owns the financed aircraft. A pledge of shares is recognised in Israel. 3.1.6 Negative Pledges A negative pledge is recognised as a binding contrac - tual obligation. Additionally, it is advisable to include and notate the negative pledge in any charges being registered to restrict the granting of any further charg - es over an asset or rights. 3.1.7 Intercreditor Arrangements There are no material restrictions or requirements imposed on intercreditor arrangements. 3.1.8 Syndicated Loans Israeli law recognises the concept of agency and the role of an agent under a syndicated loan. 3.1.9 Debt Subordination The most common methods of subordination are debt subordination and collateral subordination. Israeli law recognises subordination of collateral, which is typically effected through the grant of dif - ferent degrees of charges or by placing specific fixed charges over certain assets, to which floating charges may be subordinated in certain circumstances. Contractual subordination of debt is also recognised in Israel. However, it has no force and effect upon third-party creditors. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws The transfer or assignment of all or part of an out - standing debt under an English or New York law-gov - erned loan is generally permissible and recognised under Israeli law, assuming it is valid under its gov - erning law and provided that the documentation is consistent with the requirements of the Assignment of Obligations Law 1969, as set out in 2.7.2 Assignment/ Novation of Leases Under Foreign Laws .
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